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Having to deal with competition is a constant challenge for any business that doesn’t have a monopoly of the market. With so many players in a particular industry offering more and more products and services, a company has to contend with ever diminishing margins.

A business may obtain a temporary advantage by coming up with an innovative product or service, but only to be again fiercely besieged by competition before long. As a result, even if companies stage ever more elaborate marketing promotions, they are bound to get engaged in price wars that would ultimately diminish their profits.

A marketing strategy was introduced in the Philippines by Josiah Go, a marketing guru and strategist, precisely to address this bleak scenario. Called the Market Driving Strategy (MDS), it is designed to avoid the problems posed by cutthroat competition by allowing companies to instead tap previously underserved markets where there is little or no competition.

MDS begins with the assumption that instead of engaging in cutthroat competition with its competitors a company must seek out and exploit underserved or ignored markets. This is increasingly becoming relevant as more and more companies compete to gain market share in a complex and troubled market environment.

HEAD FOR UNCHARTED TERRITORY

Go, chairman and chief marketing strategist of Mansmith and Fielders Inc., a company that offers marketing and sales training programs, says that a crucial factor in utilizing MDS is the concept of Logic of Industry (LOI). The LOI is basically what can be considered the keys to success in an industry, and most companies compete within the confines and cycles of the LOI.

They do so by trying to be better than their competition or by offering their product or service at a lower price. But according to Go, competing in this context could be a losing proposition because the LOI is usually dictated by the market leader. By competing based on the LOI, he says, the company is actually playing their main competitor’s game.

The Market Driving Strategy or MDS thus advocates breaking the rules of the LOI by either significantly modifying the value proposition or the business system, or both, with the objective of competing in a previously overlooked or nonexistent market. When a company makes such modifications, it gives itself the leeway to seek out new markets and put up competitive barriers that could prevent or at least delay the entry of competitors in the new market that it has created.

Go says that one way to alter a business system or value proposition is to look for and adopt practices of other industries that can enhance your own business. He explains that a company need not fear that its efforts would simply be used by competition, for more often than not, these changes would either be too costly for them or would be at odds with their core competency.

ATTRACT, RETAIN CUSTOMERS

Traditionally, Go says, companies have focused on market-driven strategies that emphasize the ability to attract and retain customers. This results in brand-switching tactics such as promos to grab market share from other industry players.

But Go says that this strategy ultimately just leads to attrition, and as the competing products become too similar, more resources must be expended to gain market share, further leading to diminishing returns.

“If the value proposition is wrong and you start changing the marketing program, then you are just attacking the symptom,” he says. In contrast, MDS focuses on playing a different game rather than playing the existing game better. It is a strategy that aims to gain for companies a sustainable advantage by radically modifying their value proposition and business system, thus leading to unique products and services.

To modify your own systems, Go advises looking towards other industries: “You still have your existing competencies but you need to develop new competencies. Otherwise, you get left behind.” He says that these changes could be simple by themselves, such as minor design modifications or the addition of a service, but the important thing is to find something your opponent cannot do or cannot quickly adapt to.

In introducing changes, Go says, a company must take care not to cannibalize their existing consumer base or distort their brand image. To avoid these problems, spinning off the product or service into a separate division might be advisable. “If you come up with an innovation,” he says, “don’t kill your main product or service because that would be inconsistent with your brand. What you can do is spin it off into another brand instead.”